The European Union's antitrust regulators have initiated an investigation into US chipmaker Broadcom over alleged changes to the licensing conditions of VMware, a cloud computing company recently acquired by Broadcom.
This move comes in response to complaints lodged by several EU business users and trade groups regarding abrupt alterations in policy and practices, which they claim have led to significant price hikes and other unfavorable adjustments.
EU Is Looking Into VMware's Software Licensing
According to Reuters, the EU competition watchdog has dispatched requests for information to Broadcom to delve into the matter. A spokesperson for the European Commission stated, "The Commission has received information suggesting that Broadcom is changing the conditions of VMware's software licensing and support."
Among the complainants are prominent organizations such as Beltug, representing Belgian business users, along with counterparts from France's Cigref, CIO platform Nederland, and VOICE Germany. These groups collectively penned a letter to EU antitrust chief Margrethe Vestager, EU industry chief Thierry Breton, and Commission President Ursula von der Leyen, expressing concerns over Broadcom's purported actions.
In addition, the Cloud Infrastructure Services Providers in Europe (CISPE), comprising major players like Amazon and 26 small EU cloud providers, have raised objections against Broadcom's alleged unilateral cancellation of license terms for essential virtualization software.
SAN JOSE, CA - JUNE 07: Signage is displayed outside the Broadcom offices on June 7, 2018 in San Jose, California. Broadcom is expected to report second-quarter earnings today after the closing bell.
Broadcom Responds to Allegations
SAN JOSE, CA - JUNE 07: Signage is displayed outside the Broadcom offices on June 7, 2018 in San Jose, California. Broadcom is expected to report second-quarter earnings today after the closing bell.
Broadcom's response to the accusations includes announcing changes aimed at addressing criticism. CEO Hock Tan emphasized the company's commitment to promoting customer adoption by significantly reducing the price of VMware Cloud Foundation (VCF).
Tan stated in a blog post, "VCF includes all compute, storage, networking, management, and support capabilities that deliver consistent infrastructure and operations across clouds, and comes at half the list price compared to past pricing."
Moreover, Broadcom plans to standardize the pricing metric for its offerings across cloud providers to per-core licensing. This move is intended to facilitate customers' transition between on-premise and cloud environments by removing technical barriers and ensuring consistency in licensing costs.
Tan outlined Broadcom's strategic vision, which focuses on developing a seamless private cloud experience competitive with public cloud services. He highlighted the importance of customer freedom in moving workloads between data centers and various cloud providers, aiming to intensify competition in the market and deliver greater value to end-users.
Furthermore, VMware is in the process of completing its transition to a subscription-based model, initiated in 2018. This model provides customers with access to the latest software versions and support for a fixed term, aligning with industry standards and fostering continuous innovation.
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